The US dollar strengthened for the fourth straight session. Investors are bracing for September inflation data due later this week. The report is expected to show that inflationary pressures in the world’s largest economy remain high and that the US central bank (Fed) should continue to tighten monetary policy aggressively. Interest in the dollar among investors also increased geopolitical tensions and higher oil prices, Reuters wrote.

At around 7:45 p.m. CEST, the dollar index, which tracks the dollar’s performance against a basket of six major world currencies, rose 0.4 percent to 113.25 points. The euro was down against the dollar half a percent to 0.9693 EUR/USD. The dollar against the Japanese yen rose 0.3 percent to 145.75 USD/JPY. The euro was down 0.3 percent against the Japanese yen on EUR/JPY at 141.21.

“The dollar remains strong ahead of inflation data, which will remain high and support the Fed’s stance on higher interest rates for a long time,‘ said Convera analyst Joe Manimbo.

The inflation report will be released this week. Year-on-year inflation is forecast to slow to 8.1 percent in September from 8.3 percent. Core inflation should rise to 6.5 percent from 6.3 percent.

The head of the Chicago Fed office, Charles Evans, said today that inflation is much more persistent than the Fed originally expected. But he noted that the Fed may still be able to reduce inflation without causing unemployment to soar and the economy to slip into recession.

Friday’s statistics showed that US unemployment fell unexpectedly and the US economy added more jobs in September than expected. Traders thus increased their bets that the Fed will raise the key interest rate by 0.75 percentage points for the fourth consecutive meeting in November.

The Bank of England tried to ease concerns today over the end of its emergency bond-buying program. The Bank of England has announced that it is ready to buy ten billion pounds of government bonds. This is double the previous limit. It also created a new program to help banks access cash more easily.

Sources: Reuters, TK, MT4, Convera